There is widespread acceptance that water management must reconcile hydrologic (watersheds and basins) and political units. However, the biophysical basis of integrated water management isn’t fully understood and integrated into the actual planning, management or adjudication of water use at the basin-scale in India. Hitherto the tendency has been to assume that the relationship between rainfall and streamflow is mostly stable, except for large infrastructure projects that are known and controllable. It is increasingly clear, however, that decentralized human interventions such as groundwater abstraction, rapid land use changes, urbanization and sewage generation and watershed development significantly alter watershed processes and, by extension, ground and surface water availability. Because these are not centrally controlled, accounting for them necessitates a paradigm shift in how river basin management is conceptualized. Specifically, river basin management must be adaptive and allow managers to adjust management practices in response to changes in system behaviour.